3 firms to cut nearly 5,000 jobs

3Com says clients are not spending

Economists' hopes that the pace of layoffs would slow in the U.S. received a jolt Wednesday, when three major companies announced they would cut nearly 5,000 jobs combined.

3Com Corp. said it would cut its workforce by one-third, or about 1,000 jobs, as it outsources all its manufacturing and distribution work and closes a plant in Ireland to save money and improve efficiency.

International Paper Co. said it plans to cut about 3,000 jobs, or about 3.5 percent of its workforce, in the next year to help improve profits, and Levi Strauss & Co. said it will cut up to 650 jobs, or about 5 percent of its workforce, to slash expenses.

"The pressure for large companies to grow the bottom line is enormous," said Diane Swonk, chief economist at Bank One Corp. in Chicago. "I think we will start to see more hiring on a larger scale at the turn of the year."

Karin Bakis, a spokeswoman for Marlborough, Mass.-based 3Com, declined to specify details of the layoffs but said most would result from the closing of the plant in Dublin.

The outsourcing of 3Com's manufacturing, distribution and other aspects of operations will take about six months.

As part of the restructuring, 3Com also announced plans to open a facility in Taiwan to design low-end, standardized volume products. The company expects the center to be operating by November 2003 and fully staffed by May 2004.

3Com, which makes gear used by corporations to direct Internet traffic, called the layoffs a bid to counter weak technology spending by its customers.

"It really paints a picture of an industry that perhaps may have bottomed out," said Blaylock & Partners analyst Gabriel Lowy.

International Paper has been discussing the workforce reductions with its employees in the past week, according to Jenny Boardman, a spokeswoman for the Stamford, Conn.-based company.

She said the cuts will affect mainly salaried personnel throughout the firm, including those at its headquarters.

A small portion of the job cuts will be achieved from attrition, but most will be from layoffs, she said. The company will provide severance packages and help in finding a new job.

Levi Strauss said it would cut 350 jobs in the U.S. and 300 in Europe. Last year, the San Francisco-based jeansmaker closed six U.S. manufacturing plants in a move that laid off 3,600 workers.

Most of the U.S. cuts probably will be concentrated in San Francisco, company officials said. Other jobs will be eliminated in sales offices scattered across the country.

But the company still needs to lower its expenses more to remain competitive during the U.S. clothing industry's "worst deflation since the Depression," said Chief Executive Phil Marineau.